| Fed holds rates and says economy is recovering | ||||
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 US stocks rose as the Federal Reserve said economic activity has picked up after a severe downturn, an assessment that suggested the outlook for corporate profits was brightening. As expected, the Fed’s policysetters kept interest rates unchanged and said they will stay very low for an extended period. The Federal Open Market Committee voted unanimously to maintain the base rate of zero to 0.25 per cent in place since last December to help the economy to recover from its worst recession in decades. The FOMC statement said it expects that sluggish conditions will “warrant exceptionally low levels of the federal funds rate for an extended period." The statement noted however that “economic activity has picked up following its severe downturn” amid improvements in financial markets and the housing sector. The panel headed by Fed chairman Ben Bernanke also pledged to continue a programme of more than one trillion dollars to help keep credit flowing to the housing market and other segments of the economy by purchasing mortgage securities and other assets. It reiterated a plan to buy a total of 1.25 trillion dollars of government agency mortgage-backed securities and up to 200 billion dollars of other agency debt. “The committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010,” the statement said. The Dow Jones industrial average jumped 74.29 points, or 0.76 per cent, at 9,904.16. The gains took the Dow Jones industrial average to the verge of 10,000 as investors snapped up shares in some of the sectors that have helped to underpin the market’s long runup from the 12-year lows of early March
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